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Government Reduces Electric Vehicle Subsidy for e-2Ws, Yet Sales Remain Robust

As of February 6, 2024, a total of 7,34,760 e-2 wheelers have been registered for the fiscal year 2023-24, showcasing the resilience of the EV market.

February 10, 2024. By Abha Rustagi

The Government of India has implemented a significant reduction in the subsidy for electric two-wheelers (e-2Ws) under the FAME India Scheme Phase-II, slashing it from 40 percent to 15 percent of the ex-factory price. This decision, aimed at aligning with the evolving dynamics of the electric vehicle (EV) market, follows stakeholder consultations with Original Equipment Manufacturers (OEMs) of e-2Ws, and subsequent approval by the Project Implementation and Sanctioning Committee (PISC) for FAME India Scheme Phase-II.

Despite this subsidy reduction, the Ministry of Road Transport and Highways reports no slowdown in the sale of electric two-wheelers across the country. As of February 6, 2024, a total of 7,34,760 e-2 wheelers have been registered for the fiscal year 2023-24, showcasing the resilience of the EV market.

This information was disclosed by the Minister of State for Heavy Industries, Krishan Pal Gurjar, in a written reply presented in Rajya Sabha.

It's worth noting that under the FAME-India Scheme Phase-II, incentives are not provided to electric vehicle manufacturers directly. Instead, consumers benefit from reduced upfront purchase prices of hybrid and electric vehicles, which are reimbursed to the OEMs by the Government of India.

In parallel efforts to boost domestic manufacturing and export of electric vehicles, the Ministry of Heavy Industries has introduced two Production Linked Incentive (PLI) Schemes. First. the 'National Programme on Advanced Chemistry Cells (ACC) Battery Storage' scheme, approved on May 12, 2021, with a budgetary outlay of INR 18,100 crores, aims to establish a cumulative ACC battery manufacturing capacity of 50 GWh.

Second is the PLI Scheme for the Automobile and Auto Component Industry, sanctioned on September 15, 2021, with a budgetary allocation of INR 25,938 crore, which provides financial incentives to bolster domestic manufacturing of Advanced Automotive Technologies (AAT) products, including electric vehicles and their components.

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Policies & Regulations

Indian Government

Electric two-wheeler

FAME-II Scheme

Ministry of Road Transport and Highways

Ministry of Heavy Industries